Reach Clean Energy Goals Faster and Cheaper With Community Power

Reaching our renewable energy goals can be met cost-effectively, more quickly, and with greater economics benefits if Californians focus on decentralized renewable energy.
That’s the powerful conclusion in the recently released report, Community Power: Decentralized Renewable Energy in California, and the lessons are applicable in every state across America. These lessons are attracting attention, as large-scale desert solar projects and new transmission lines meet stiff resistance from an increasingly broad-based opposition.

The cost-competitiveness of renewable energy is not news to anyone familiar with the industry, but Weinrub shows that for the most prominent decentralized renewable energy source – solar power – decentralized production from photovoltaics (PV) has better economics than centralized solar thermal power plants. His research is reinforced by data from the California Solar Initiative that shows that large majority of decentralized solar PV’s economies of scale are captured by projects as small as 10 kilowatts. Research from the Institute for Local Self-Reliance shows that wind economies of scale are similarly limited for larger wind projects.

Weinrub also shows that California has plenty of decentralized renewable energy potential – with rooftop solar alone – to meet its ambitious renewable energy target (33% by 2020). As he notes, the actual potential far exceeds the necessary amount required to meet the state standard:

The potential for decentralized solar generation goes well beyond the numbers cited in these studies, which represent only the most accessible commercial solar PV installations. Other, smaller rooftops are available for commercial PV power in urban areas, as are carports, parking lots, other disturbed land, rail and highway right of ways, and so forth.

California also has abundant and dispersed wind power resources that could be tapped in a decentralized fashion.

As important as the actual potential, Weinrub illustrates how decentralized renewable energy is more likely (or perhaps the only) method for reaching the state’s ambitious near-term target of 33% renewable electricity by 2020. Centralized renewable energy often requires new high-voltage transmission capacity, which can take 10 years or more to construct, before the renewable energy project itself begins construction. Centralized projects pursue clean energy in larger increments, but it will mean little to Californians to have a big pipeline of centralized renewable energy projects if none are ready by 2020.

Building a Renewable Energy Consituency

While all these arguments for decentralized generation make a compelling case in the electricity market, the most valuable of Weinrub’s findings is the massive economic benefits of choosing a decentralized model for renewable energy deployment. The jobs and economic impact advantage of dispersing wind and solar projects across California far outweigh the increased marginal cost – if any – of smaller scale projects. Weinrub also notes that this development model reduces environmental impacts, a hotly contested topic regarding centralized solar power and its attendant new transmission lines.

Weinrub references but doesn’t make explicit that decentralized energy carries significant political advantages. By spreading around wealth and expanding the field of energy producers, decentralized generation creates a political constituency to support renewable energy development, in stark contrast to the NIMBY response to centralized desert solar or new transmission lines.

Unfortunately, while identifying the significant benefits and potential for decentralized renewable energy, Weinrub illustrates a challenging picture for its adoption. For one, California regulators have allowed incumbent utilities to slip on their commitment to meet the state’s renewable energy milestones and instead invest millions in a fleet of new natural gas power plants. He also identifies the appropriately named “Legacy Model of Big Power:” a state and federal web of financial and regulatory rules favoring the development of large-scale, centralized power plants.

But the commonsense adage “follow the money” provides the most vivid illustration of structural barriers to decentralized generation. Rather than invest in decentralized generation, the dominant investor-owned utilities prefer to put their money in new transmission lines, where their investments get a guaranteed profit at the expense of California ratepayers. The striking growth in new transmission lines since 1999 stands in stark contrast to near-flat energy demand. And every dollar these utilities insist on using to overbuild transmission infrastructure is a dollar that can’t be spent on the tools of the future grid: new distributed wind and solar power, energy storage, or a smarter grid.

Overcoming Barriers

Weinrub offers two political options for overcoming the existing barriers to decentralized generation, although the road for each has its own perils. Community Choice Energy legislation first passed in California in 2002, but it wasn’t until a year ago that a community successfully overcame utility-funded opposition to take control of its energy future. Legislation recently introduced in the California legislature in 2011 hopes to fight utility intransigence by strengthening the 2002 law.

The second strategy – a feed-in tariff – has the best track record, but is the least developed in the United States. Jurisdictions with feed-in tariff policies (such as Germany, Ontario, Vermont and Gainesville, Florida) have seen significant deployment of renewable energy (particularly solar) by offering standardized, long-term contracts and prices sufficient to offer developers a reasonable return on investment. Feed-in tariffs provide cost-effective deployment of renewable energy by reducing the rate of return of developers in exchange for significantly reduced risk. While feed-in tariffs are actually quite similar to the model for deploying new power generation in regulated utility markets, they have yet to catch hold significantly in the United States.

Weinrub misses an opportunity to highlight some of the other, less comprehensive strategies for supporting decentralized energy. Colorado, for example, has passed a “community solar gardens” law to encourage the development of solar power with multiple owners and to allow folks without sunny roofs to “go solar.” Sixteen states have created set-asides or additional mandates for distributed generation or solar power.

Despite these omissions, Community Power makes a powerful case for decentralized renewable energy generation. After reading this report, it’s hard to imagine that policy makers would be content to allow renewable energy development to continue under the conventional central-station model.

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